Wednesday, April 21, 2010

Vienna, April 21 – Moscow’s excessive reliance on profits from the export of oil and gas -- the centerpiece of Vladimir Putin’s policies – has been contributing to a significant decline in the standard of living of most Russians beyond the capital’s ring road even as it has boosted the country’s GDP, according to a UN report on “Energy and Stable Development.” As a result, Nataliya Zubarevich, a geographer at Moscow State University who helped prepare the report says, “there is oil and gas [in Russia] but no happiness,” at least outside Moscow, the oil and gas producing regions of Khanty-Mansiisk and Yamalo-Nenets, and the processing center in Tyumen (www.polit.ru/news/2010/04/21/paras.html). Because the Russian government has “incorrectly” relied on oil and gas profits alone to show economic growth, she continues, there has been a decline in the well-being of Russian citizens, not only in terms of income but also in health, education and other social services (www1.voanews.com/russian/news/russia_economy_2010_04_20-91655984.html). Indeed, the report points out, in order to support oil and gas exports, Russia has to spend nearly five percent of its GDP to support the oil and gas infrastructure, an amount that severely limits Moscow’s ability to invest in the modernization of the country and that will largely preclude it as the cost of drilling increases and Russia’s production of oil and gas declines. In an interview with “Svobodnaya pressa,” Zubarevich added that the sale of oil and gas abroad had helped Russia but that the way in which these profits were used now constitutes “a very serious break on development,” one that she suggests will only become worse if Moscow doesn’t change course (svpressa.ru/politic/article/24204/). The UN report itself, she says, reflects that dual assessment. The report’s first section says that earnings from oil and gas gives Russia “a chance for a leap forward in innovative development,” all the more so because some of the technologies used in oil and gas processing can be applied in other fields. But the succeeding sections “assess this possibility much more skeptically.” And Zubarevich says that she views that assessment as the more correct. Indeed, she continues, as long as the oil and gas money is flowing in, “the Russian powers that be really are not interested in innovations.” Such people don’t need or want change, and they talk about innovations only to make themselves look better “in the eyes of the world.” Because that is so, Zubarevich argues, the distribution of profits is unlikely “to simulate innovations.” Instead, even if money is redistributed more equally, that alone will not promote positive change. Indeed, the Moscow geographer says, for innovation, there will need to be “a change of institutions and the rules of the game in society.” People will have to be rewarded not because of where they sit and what they control but rather for what they think up, a complete transformation from the current situation. These are “global changes,” she continues, and include “very significant changes in the political space. Without that, nothing will happen.” And those changes involve far more that decentralization of control: they require “competition in the political space and openness in the mass media. Only this will reduce corruption in the system of distribution.” “In the institutional design which now exists in the Russian Federation,” Zubarevich said, noting that this was her “personal opinion,” “innovative development is impossible.” And some of the proposals for innovation, such as Academic Zhorez Alferov’s call for a Manhattan Project-style effort, simply won’t work. Alferov, Zyubarevich pointed out, “is a member of the Communist Party of the Russian Federation.” He always put the state in first place, and while the state can play some role, the kinds of innovations Russia needs are not “’nano’ and not ‘nuclear research’” but rather a broadening of opportunity for “small innovation improvements in the entire structure.”Indeed, she says, even if Russians came up with a breakthrough in nano technology, the country would not be able to introduce it because “we do not have the stimuli and drivers which would be necessary for that kind of innovation.” Perhaps the country can change so that this will be possible, Zubarevich concludes, but it will have to change in major ways.

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Paul Goble is a longtime specialist on ethnic and religious questions in Eurasia. Most recently, he was director of research and publications at the Azerbaijan Diplomatic Academy. Earlier, he served as vice dean for the social sciences and humanities at Audentes University in Tallinn and a senior research associate at the EuroCollege of the University of Tartu in Estonia. While there, he launched the “Window on Eurasia” series. Prior to joining the faculty there in 2004, he served in various capacities in the U.S. State Department, the Central Intelligence Agency and the International Broadcasting Bureau as well as at the Voice of America and Radio Free Europe/Radio Liberty and at the Carnegie Endowment for International Peace. He writes frequently on ethnic and religious issues and has edited five volumes on ethnicity and religion in the former Soviet space. Trained at Miami University in Ohio and the University of Chicago, he has been decorated by the governments of Estonia, Latvia and Lithuania for his work in promoting Baltic independence and the withdrawal of Russian forces from those formerly occupied lands. Mr. Goble can be contacted directly at paul.goble@gmail.com